US Trade Deficit Narrows More than Expected on Declining Oil Imports


US Trade Deficit Narrows More than Expected on Declining Oil ImportsUS trade deficit contracted more than forecasted in June after petroleum imports fell to the lowest level in 3 ½ years, indicating that trade didn’t weigh on economic growth in the second quarter as previously thought.

The Commerce Department reported on Wednesday that the trade shortfall narrowed 7.0 percent to $41.5 billion. This is much lower than the nearly $44.8 billion initially estimated when the government released the first second-quarter GDP report last week.

“The improvement in June could mean a modest upward revision to the second-quarter GDP estimate,” Millan Mulraine, New York-based deputy chief economist at TD Securities, told Reuters. “It also implies a fairly strong hand-off to third-quarter GDP.”

The deficit, when inflation is adjusted, shrank to $48.8 billion compared to $52.0 billion in May. This prompted economists to estimate that GDP grew by an extra 0.3 percentage point in the April-June quarter. The analysts had forecasted June’s trade deficit to hit $44.7 billion, up from $44.4 billion in May.


Imports declined 1.2 percent in June, the most in a year, to $237.4 billion while petroleum imports plunged to $27.4 billion, the weakest level since November 2010. This compares with $28.3 billion in May. US has gradually reduced its reliance on oil imports as domestic production reached new heights due to the use of a technique known as fracking to extract shale oil and gas resources. The petroleum deficit plunged to new lows last seen in May 2009 in June.

Non-petroleum imports declined to $167.6 billion from May’s $169.6 billion, indicating that businesses accumulated inventories much slowly. Exports rose 0.1 percent to an all-time high of $195.9 billion in June, as deliveries of automobiles, engines and parts grew to a record high. To register for a free 2-week subscription to ForexMinute Premium Plan, visit

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